Who has to pay?
What is the deadline to file?
Can any tax deductions be claimed?
Everything you need to know!
It’s hard enough to come to terms with tax rules in your own country without having to familiarise yourself with international tax regulations too!
So if you’re a non-resident landlord with a property in France, you may be feeling daunted by the prospect of managing your French tax obligations.
After all, there are a lot of different types of tax charges to consider.
Most French property owners will be aware that they are required to submit a tax return to the French Tax Office if they are earning rental income.
But aside from rental income, there are a number of other property taxes that French real estate owners should be aware of.
Take Taxe d’Habitation and Cotisation Foncière des Entreprises for example. Both of these taxes may apply to your property, depending on your personal circumstances.
In this guide we will outline everything you need to know about your French Taxe d’Habitation and Cotisation Foncière des Entreprises obligations and share our top tips for managing your French tax requirements.
What is the French Taxe d’Habitation (Housing tax)?
Taxe d’Habitation is a tax which is payable, either by the owner of a property or a tenant who is renting a property on a long-term basis (one year lease).
Otherwise known as the ‘housing tax’, this local tax is based on the characteristics of your home, its location and your personal situation.
Who has to pay Taxe d’Habitation?
You must pay this housing tax if you own, rent or occupy free of charge your main residence.
In short, if you let out a property on an annual basis, the tax is payable by the tenant. In other words, any tenant occupying a property on 1 January on a permanent or extended basis is liable for the tax.
The tax applies whether the property is furnished or unfurnished.
However, it is important to note that tenants of holiday lettings do not pay the tax.
And, if you move into the property mid-way through the year, the former occupier is legally required to pay the tax for the entire year, unless any private agreement to the contrary is made.
What about second homes?
You must also pay the tax if you own a second home (provided the property is capable of occupation), even though you may not physically be resident on 1 January. In other words, the law assumes that if you have the right to occupy the property and it is furnished and habitable, the tax is payable. Although, in certain cases, it is possible to benefit from an exemption.
Who is exempt from French house tax?
In order to be exempt from housing tax, you must be a low-income earner or a recipient of the solidarity allowance for the elderly (Aspa) or the supplementary invalidity allowance (Asi) and live:
- with your husband or wife
- with your PACS partner
- or with 1 or more dependents
What are the housing tax rates?
The formula to calculate the tax rate is complex to say the least! Broadly speaking, it is based on the notional rent that the property might be expected to achieve in the open market and takes into account the condition, size and location of the property.
Having said that, for main homes, the housing tax rate is typically 0.2%. Meanwhile, for second homes, the tax rate varies between 1.2 – 1.7%, depending on the ‘rateable value’ of the property.
If you have children, you may be entitled to housing tax relief of between 10 – 15% for each dependant.
And finally, if you carry out major works to your property, you are required to advise the tax authority (Form IL 6704), who will then undertake a revaluation of the property. The revaluation will be necessary if the works increase by at least 10% the rateable value of the property.
What is Cotisation Foncière des Entreprises (CFE) tax?
CFE is an annual tax which is paid by owners of furnished properties in France, based on the theoretical rental value of their property. The tax typically amounts to between €100 – €1,500. The good news is that many property owners pay too much CFE and are entitled to a refund. Exactly how much CFE you can claim back will depend on the amount of income and expenses you had in the relevant tax year.
Who has to pay CFE?
You will be required to pay CFE if you have use or enjoyment of a furnished property in France.
Who is exempt from CFE?
You will not be charged CFE in your first year of ownership of the property or if your annual turnover is under €5,000.
There are also a number of professions that are exempt from CFE including farmer, author, composer, painter and sculptor.
Can you pay too much CFE and get a refund?
Yes, it’s very common for French property owners to overpay on their CFE tax bill. The good news is that, if this happens to you, PTI can help you claim your CFE refund from the tax authorities. Exactly how much you can claim will depend on your personal circumstances.
Which countries have tax relief agreements with France?
France has signed international tax agreements with more than 120 countries. In other words, if you are a citizen of one of the countries listed below, you may be exempt from, or entitled to a reduce rate of, CFE or housing tax in France.
|Belarus||Belgium||Benin||Bolivia||Bosnia and Herzegovina|
|Canada||Central African Republic||Chile||China||Congo, Republic of|
|Ireland, Republic of||Israel||Italy||Ivory Coast||Jamaica|
|Japan||Jordan||Kazakhstan||Kenya||Korea, Republic of|
|Slovenia||South Africa||Spain||Sri Lanka||St Martin, St Pierre and Miquelon|
|Togo||Trinidad and Tobago||Tunisia||Turkey||Turkmenistan|
|Ukraine||United Arab Emirates||United Kingdom||United States||Uzbekistan|
What are the deadlines?
The two deadlines fall on different dates.
The deadline to pay your housing tax bill is 15 November each year.
Meanwhile, the deadline to pay your CFE bill is 15 December each year.
Who can help me with my French tax obligations?
If you are a real estate investor with a property in France, Property Tax International (PTI) can help you to manage your French tax obligations.
We cater for investors and lifestyle property owners all over the world.
So whether your property is furnished or unfurnished, we offer a range of French tax filing services to suit your needs.
With unrivalled knowledge of French tax legislation, our team will minimise your tax liability by ensuring you avail of every relief you’re entitled to.
Save time and stress when filing your international property tax return.